Archive for Saturday, January 15, 2011

Kansas Legislature’s lack of funding hurts KPERS

Glenn Deck, executive director of the Kansas Public Employees Retirement System, talks about funding problems in the system and what the Legislature will be considering as ways to fix it. His comments came after a meeting of the House Pensions and Benefits Committee during the first week of the 2011 legislative session.

January 15, 2011

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— Years of under-funding Kansas’ public pension system need to be corrected soon, officials say.

“Current benefits are safe for a period of time, but we do have a significant long-term funding shortfall,” said Glenn Deck, executive director of the Kansas Public Employees Retirement System.

KPERS projects a $7.7 billion gap between long-term revenues and commitments for paying pensions.

Nearly all state, school district, county and city employees in Kansas are part of KPERS. Some 260,000 Kansans are paying into the system or drawing out retirement benefits. KPERS pays out more than $1 billion in benefits per year.

But the state has not been contributing at the rate it needs to keep KPERS properly financed.

Combine that with devastating investment losses in the stock market during the recession, and KPERS needs help.

“That’s sort of the peanut,” said Julian Efird, of the Kansas Legislative Research Department. “There have been systematic under-contributions and there have been periods of significant market losses,” he told members of the House Pensions and Benefits Committee last week.

Deck is quick to note there is no immediate problem in paying out benefits, but adds, “The longer we keep pushing it off, the price gets bigger.”

State Rep. Mitch Holmes, R-St. John, and chairman of the Pensions and Benefits Committee, plans on holding several informational hearings on KPERS issues during the current legislative session. Whether that will result in legislation to try to fix KPERS is uncertain at this time.

“I’m very encouraged by the enthusiasm of the members” in discussing KPERS issues, he said.

Any fix will cost money, which is something that the state is lacking.

In his departing comments, former Gov. Mark Parkinson lamented that he was unable to address problems with KPERS because of the state’s severe budget crunch.

“Hundreds of thousands of Kansans that serve our state will depend on KPERS to secure their retirement, and it is not funded properly. This is true for a variety of reasons, and they are all fixable,” Parkinson said.

“Unfortunately, part of the fix will require the state to provide additional funding. Another part of the fix will require people in the system to give a little more and accept a little less,” he said.

In his State of the State address last week, new Gov. Sam Brownback urged the Legislature “to work to ensure the integrity and soundness of the system for decades to come.” Senate President Stephen Morris, R-Hugoton, has appointed a special committee to work on KPERS, and assigned himself as chairman.

State pension systems across the nation are in similar situations, but a recent study by the Pew Center for the States said that KPERS was the second-worst under-funded in the nation.

During the 1990s, Deck said, KPERS routinely benefited from double-digit percentage gains through investments. He said that “masked” the problem of under-funding from the state.

Some states are considering adopting 401 (k)-style plans for new employees. Deck said he thought Kansas legislators would also study that.

Comments

average 4 years, 3 months ago

Most Regent's school hires over the last decade have been unclassified/faculty, and thus have been in a 403 (401k-like) system for years, not KPERS.

It's the logical answer, since that's where the business world has gone, and the idea of working for one employer for 30 years is basically dead.

The problem is that the transition would be even more painful. The thousands of younger state employees paying in to KPERS right now are a major reason it can pay out to present retirees. If there stopped being new people contributing, they'd have to face the underfunding that much sooner. And legislatures are not into short-term pain.

notanota 4 years, 3 months ago

I'm not sure that's completely the case. I know they're offering 403s on top of KPERS, but I don't think they take away the KPERS.

average 4 years, 3 months ago

KPERS-eligible state employees can elect to defer some compensation in a 457 account (again, mostly like a 401k anymore). But, unclassified staff and faculty hired in the last decade at KU and other Regents schools, who aren't grandfathered into KPERS pension, don't participate in it. 403b only.

question4u 4 years, 3 months ago

The state pension system in Kansas is "the second-worst under-funded in the nation," but even more revealing is the fact that the same study shows that Kansas is one of only 8 states in the country that have under-funded. According to Kansas Reporter the state's elementary schools rank 37th in the nation, and the most recent USNews rankings listed Kansas high schools as 46th out of the 48 states that were reviewed. Whether you're proud of these statistics or not, couldn't these things have something to do with how Kansas is perceived by the rest of the nation?

newmedia 4 years, 3 months ago

Just having a hard time connecting the dots. If Kansas high schools are 46th out of 48 reviewed which I seriously doubt, ( you can find negative reports about anything if that is your sole purpose and you are willing to nose around a little) what does that have to do with KPERS inefficiency?

texburgh 4 years, 3 months ago

Before using the Kansas Reporter as your source, consider his source. The Kansas Reporter is funding by extreme anti-government groups which in turn are funded by Koch Industries. It is not reporting, it is an ideological propaganda group.

And in truth, thanks to the great recession, nearly all pension funds are underfunded at this time. Kansas is among the worst of all the funds due to chronic underfunding by the state. The state has NEVER put in what the actuaries have said was necessary because they relied on good returns. Had Kansas had responsible legislators who put the money in consistently, we would not have this problem. It is just like the 401k investor who stops putting money in when the market is booming and then can't understand why there is a problem when retirement comes. And in the 401k world, that's exactly what happened in 2008 to millions of retirees.

just_another_bozo_on_this_bus 4 years, 3 months ago

It's interesting that Wall Street banks' contractual obligations to pay out 7-figure bonuses to the folks who drove the economy into the ditch, taking KPER's and other pension funds' investments with it, are sacrosanct. But folks who quietly did their jobs under the promise of rather modest pay and retirement packages will likely be thrown under the bus by the "fiscal conservatives" looking for ways to please the Koch brothers.

somebodynew 4 years, 3 months ago

Wow, bozo - a post I can COMPLETELY agree with you on. That is just one of the reasons this topic gets me riled up.

Oh and I typically agree on some of your points, but this one completely.

Catalano 4 years, 3 months ago

Bozo: check out Matt Taibbi's new book: Griftopia: Bubble Machines, Vampire Squids, and the Long Con That is Breaking America.

notajayhawk 4 years, 3 months ago

"But folks who quietly did their jobs under the promise of rather modest pay and retirement packages will likely be thrown under the bus"

And where, Herr Klowne, does your information (that a single state employee will not get his/her promised pension) come from?

Oh, that's right, out of your diaper, like everything else you post.

notanota 4 years, 3 months ago

Indeed. They'll be expected to pay more in and receive less out, and somehow it's ok because they must just all be lousy union teachers, right?

John_Brown 4 years, 3 months ago

Even the well funded public employee retirement funds in the country (Ill, New Jersey, California) are in trouble due to the state budget crunches. They are solvent now but are taking an ever increasing chunk of the state budget. I believe that the New York system alone needs a $20 billion increase in order to maintain its current obligations. Due to the fact these states are all operating under multi-billion $ annual deficits, polititians are going to be asked to maintain retiree benefits at the expense of current funds to provide for education. Watch how Govenor Christy in New Jersey is attacking this issue. Outside of the NEA/public employee unions, KPERS et al have no allies in state budget fights. They will lose.

Alceste 4 years, 3 months ago

Mr. John_Brown, bluntly, you are very incorrect....at least with respect to Illinois being a "...well funded public employee retirement (fund).....". It is in reality the worst with only 54 percent of its pension obligations funded, according to the report, which looked at fiscal year 2008.

I stopped reading what you wrote

http://www.reuters.com/article/idUSTRE61H13X20100218

http://www.pewcenteronthestates.org/report_detail.aspx?id=56695

http://downloads.pewcenteronthestates.org/The_Trillion_Dollar_Gap_final.pdf is where one can download the report.

Jimo 4 years, 3 months ago

Illinois is not well funded. New Jersey is not well funded. Cali is not well funded.

Indeed, NJ Gov. Christy was attacked for his attack precisely because NJ - CREATED - the funding problems - just like KS - by refusing to fund its program year after year.

Once again: Neocon strategy: run government badly and then claim government can't do anything right as justification for defunding (and defanging) government (with the consequence of enriching the rich further).

notajayhawk 4 years, 3 months ago

Neocon strategy, little jimmie? Because the Republicans control the legislatures in those three states?

Oh, wait, the Democrats control the legislatures of Illinois, New Jersey, and California. As usual, your rants do nothing but point out your ignorance.

weeslicket 4 years, 3 months ago

notajayhawk: "little jimmie" name calling = bullying agree or disagree with a poster all you like, but really, enough with the name calling.

Jimo 4 years, 3 months ago

Indeed? For example, a near illiterate would know that California requires a 2/3 majority to raise taxes. Republicans, thereby, CONTROL the finances of the state in that NO action may be taken without their consent (and until this month, the consent of the Republican Governor). Other limitations exist on approving budgets. Bipartisan gerrymandering discourages any compromise and by such, responsible action.

Similar political and procedural limitations, imposed by Republicans over the course of many election cycles, exist in NJ and IL.

I would note that states controlled almost wholly by Republicans have some of the most severe funding problems. Texas, for example, despite spending almost nothing on anyone who isn't rich (#1 state for uninsured persons, e.g.), manages to have a $25 BILLION budget deficit. Hmmm...I wonder how much funding of state employees pensions Texas plans?

Perhaps we should discuss Arizona's massive deficit and its 50% cut in funding for mental health? (Gee, why would AZ need funding for mental health?) Or its death panels for poor but sick 'losers'? Or maybe you're too embarrassed to take that one on?

notajayhawk 4 years, 3 months ago

"a near illiterate would know that California requires a 2/3 majority to raise taxes"

Yes, you would.

So let me get this straight: When it's a Democrat-controlled state, it's the minority's fault, when it's a Republican-controlled state, it's the majority's fault. That pretty much sum up what you're trying to pass off as an argument? Very - um, convenient - belief system you have there, little one.

"Perhaps we should discuss ..."

Perhaps we should discuss anything to try to change the subject and distract from the fact that you tried to blame the financial condition of three Democrat-controlled states on "Neocon strategy". Nice try, but as usual, no cookie.

Alceste 4 years, 3 months ago

Glenn Deck and his cronies need to accept responsibility for their own parts in making poor investment choices. They guy is paid over $130,000.00 per year and the "investment team" are paid equally well.

ksriver2010 4 years, 3 months ago

"working for one employer for 30 years is basically dead" Not at the state. Most employees are in it for the long haul, with many of them thinking it is the end-of-career job. New folks get smart and leave for the real world.

Mari Aubuchon 4 years, 3 months ago

Real world???

What makes working for a corporation more "real" than teaching, maintaining our infrastructure, or keeping our justice system going?

Alceste 4 years, 3 months ago

ksriver2010 says: "..."working for one employer for 30 years is basically dead". Not at the state. Most employees are in it for the long haul, with many of them thinking it is the end-of-career job...."

These people are called R.O.A.D. Warriors in Topeka: Retired On Active Duty because they do ever so little in their last several years: They're as far as they're gonna go pay wise (The state's Merit Pay plan was killed many, many years back.....new hires are expected to do as much labor as these R.O.A.D. Warriors.....no lie....)......and they're just on cruise control. RoadOnActiveDuty......R.O.A.D.

notanota 4 years, 3 months ago

I know I've never never had a coworker that didn't pull their weight in the private sector.

Alceste 4 years, 3 months ago

That isn't the way the state works....least wise....not Kansas. And I made a funny above....it should read RetiredOnActiveDuty = R.O.A.D. Warrior

These 25+year "veterans" (not to say that some with only 20 years do the same thing) simply occupy a chair and wait. New Hires are expected to do the exact same amount of work these R.O.A.D. warriors are doing; the R.O.A.D. warrior is NOT required to GROW within their own job....even if they have no desire to be promoted or transfer to some different job; they're permitted to self-demote into "easier" slots which pay less BUT the R.O.A.D. warrior is permitted to take their pay(less 2.5%) as they self-demote themselves into less stressful jobs.

State's full of these R.O.A.D. = RetiredOnActiveDuty "civil servants".

notanota 4 years, 3 months ago

Seriously. I've seen plenty of leeches in the private sector who managed to get overpaid for doing nearly nothing and warming a seat. It's especially common with short-timers everywhere.

jafs 4 years, 3 months ago

Perhaps one reason that people don't work for the same employer for that long anymore is that employers don't offer the incentives to do so, including pension plans.

pace 4 years, 3 months ago

The republicans underfunded the pension plan, they spent the money on special economic adventure plans The republicans underfunded the education programs, they spent the money investing in economic adventure plans. Now the economic adventurers have removed the capital from the projects and the economy has buckled under the strain of funneling money to economic plans. The economic plans that did not create economic generating infrastructure, too many withdrawals and no foundation poured. It is time. It is time to blame the liberals. Lets round up the 40 or 50 in the state and blame them while we regretfully have to renege on the pension and cut education we need to find some more money from somewhere (education, arts, health) we need to funnel more money to economic adventure plans. It is the liberals fault, they are the blame, we do not need to even look at the economic adventure plans and how they worked, That is not necessary. We need more liberals, there is a lot to blame the liberals for..

yankeevet 4 years, 3 months ago

faggetaboutit............its only money...........

Jimo 4 years, 3 months ago

ROFL Yes, Kansas is infamous for its job-killing regulations! (not)

Not that abandoning non-regulation based on science denial or curtailing military spending based on imaginary threats wouldn't boost the U.S. economy. !!

But much like the budget deficit, this is merely a rhetorical complaint necessary to support an ideological wishlist -- to be abandoned the instant there is a conflict between the complained about problem and GOP candy.

coloradoan 4 years, 3 months ago

Newmedia -

The connection is that if the KPERS compensation is beneath that of other loacles, then it is hard to attrat the personnel who can elevate the the learning prospects of the students.

weeslicket 4 years, 3 months ago

just wondering why i haven't heard from any of the "inviability of a contract" folks so far.

kpers is, whatever else you may think about it, a contractual obligation of this state to a qualified group of employees.

notanota 4 years, 3 months ago

Indeed it is. It's the same as having someone spend your 401k or decide not to give you the matching funds they said they would. "Oops, I spent the money on something else" isn't a valid answer in either case.

notajayhawk 4 years, 3 months ago

And gee, slick: Just as I asked boohoozo above, your information that they're going to change that contract in any way comes from - where, again?

I don't suppose it occurred to you - or any of your knee-jerk ranting comrades - that any proposed changes (e.g. changing to a 401K-style plan) might just be only for future hires?

just_another_bozo_on_this_bus 4 years, 3 months ago

Here you go, nota.

Gingrich seeks bill allowing state bankruptcy to avert bailouts Move afoot to help states escape benefit obligations

"Former House Speaker and possible GOP presidential contender Newt Gingrich is pushing for federal legislation giving financially strapped states the right to file for bankruptcy and renege on pension and other benefit promises made to state employees."

Read more: http://www.pionline.com/article/20110110/PRINTSUB/301109976#ixzz1BDYOTUjR

notajayhawk 4 years, 3 months ago

And gee, boohoohoohoozo, Gingrich was elected governor of Kansas (or to its legislature) when, again?

just_another_bozo_on_this_bus 4 years, 3 months ago

This comment was removed by the site staff for violation of the usage agreement.

weeslicket 4 years, 3 months ago

notajayhawK "slick" and "boohoozo" 1. again with the name calling. i've asked you to call me by my name. that's an easy request to actively acknowledge.

  1. continued from notajayhawk: "above, your information that they're going to change that contract in any way comes from - where, again?" so you agree with the "inviability of a contract"?

  2. continued: "I don't suppose it occurred to you - or any of your knee-jerk ranting comrades - that any proposed changes (e.g. changing to a 401K-style plan) might just be only for future hires?" yes, it has occurred to me. and, in fact, this is the direction things have been moving for some number of years. and i also expected that transitioning from one investment model to another investment model was going to be something of a bumpy ride. so, we actually agree on this bit.

in the meantime, the state of kansas has a real contractual obligation to certain group of qualified employees.

just_another_bozo_on_this_bus 4 years, 3 months ago

Interesting bit of "moderation" in this node of this thread.

My post gets removed for noting the consistently narcissistic behavior of the poster who shall remain un-named, while his petty name-calling remains for all to see.

notajayhawk 4 years, 3 months ago

"consistently narcissistic behavior of the poster who shall remain un-named"

You forgot your own name?

just_another_bozo_on_this_bus 4 years, 3 months ago

With your penchant for name-calling, I don't really need one, do I?

notajayhawk 4 years, 3 months ago

"in the meantime, the state of kansas has a real contractual obligation to certain group of qualified employees"

And I haven't said - or seen - anything to the contrary in this story or thread, weeslicket.

just_another_bozo_on_this_bus 4 years, 3 months ago

Do I see a little backpedaling there, nota? That must be very difficult for you.

weeslicket 4 years, 3 months ago

thank you for calling me by my name.

"And I haven't said - or seen - anything to the contrary in this story or thread" i never suggested you did.

this is another wait and see. (although past legislative behavior leaves me less than optimistic)

jafs 4 years, 3 months ago

If bozo is correct, and I have no reason to think otherwise, then states will in fact be able to renege on their pension obligations, and not just for future hires.

And, in fact, on other threads, participants in this discussion have claimed that KPERS and other such plans are not in fact "promises" of benefits, and that employees are only entitled to the wages they earn.

It's very possible if the legislation is passed, that the state of KS will try to avoid living up to their end of pension obligations in a variety of ways, just as they've done with education funding.

just_another_bozo_on_this_bus 4 years, 3 months ago

Republicans are always on the lookout for ways to speed up the race to the bottom for working folks, even retired ones.

William Weissbeck 4 years, 3 months ago

There is a major flaw in the 401(k) approach - one that is just as likely to blow up 20-30 years from now. The 401(k) model depends in large part on the exercise of personal responsibility by the individual worker. While personal responsibility is good in theory, it's pretty rough in practice. Too many people are simply saving far too little for their retirement, and/or investing in the wrong investments. The old defined benefit pension system depended on company profits and prudent investments. Companies abandoned these because they were costly, the companies were on the hook, and they realized that a certain number of workers even when offered a employer matching 401(k) alternative - would not contribute. Units of government don't generate profits to fund pensions - they are dependent on prudent investments and general growth in the economy. If those two fail - it's Katy bar the door. But always keep in mind, just like in Vegas - no matter what the bet, Wall Street never loses.

gbulldog 4 years, 3 months ago

It is my understanding that the State of Nebraska tried a retirement experiment by offering a 401K or a defined benefit pension plan to Nebraska State employees. After several years, the State found that 401K retirees were sinificantly behind in their retirement funding. Now why is that? One of the reasons was that the investment practices were different. The 40K was managed by a person who had little or no knowledge of investment practicesor depended on finding someone to manage the money for them. Instead of funding KPERS properly, and providing the Legislator with a "much better" retirement than State employees, The Legislature, as well as many Corporations have failed to properly fund their pension plans.

When a State employee retires, the KPERS benefit is fixed. No matter what the inflation rate is, the retiree will not receive an increase in benefits, unless by special action by the Legislatiure. So when gas price jumped 25 cents a gallon today, State retirees face additional expenses without an increase in income, unless they have alternitive sources of income.

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